Today we’re going to discuss some alternative real estate opportunities.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: We’ve been kind of looking at the conundrum between landlords and tenants in the state of Oregon where we’ve got these tenants who are strained to pay their rent, landlords who still need to pay their mortgage. And the tie between them is breaking because legislation’s kind of couching us against each other.
Bob Nelson: Exactly. And I understand the situation. I’m a landlord and I’m sympathetic to the cause. However, if you have a mortgage payment and you have other bills attributable to the property, you’ve got to have income to cover it. Otherwise, you’ve got to have a very deep savings account and that doesn’t ride well with landlords. After a while, it doesn’t ride well with landlords.
Marcia Edwards: I understand the newer legislation is talking about all but 20% recovery ability for the landlords. That means you have to have staying power until that tenant is able to recover.
Bob Nelson: Exactly. What does that mean then for other types of real estate? Would other types of real estate have appeal? As an example, you could sell a property and do a 1031, a tax-deferred exchange into alternative forms of investment that would still involve real estate, but would not necessarily put you in direct management responsibility and so forth. I’m referring to a DST, a Delaware statutory trust.
A tenant in common, which is a joint venture interest with other people who commonly own it with you, where there’s typically professional management and professional asset management on top of that. So, that it’s really kind of a no-brainer. You give them the cash, you jump in the backseat of the car and say, “Okay, I’m with you for the next seven years.” And then you hope that they do well.
Marcia Edwards: That’s what I was going to say, Bob. The challenge I have is I have control issues and that’s why I like being the landlord of real estate, which I can touch, see, and feel. A lot of that goes away with these structures, the way you’re describing that.
Bob Nelson: Exactly. And that’s the part that people don’t particularly understand until they’re pretty close to making a decision. “I think I want to do it” and then they kind of stand back and think, “Well, wait a minute, what happens if I die and my estate needs the money? What happens if this? What happens if that.” And you have given your money to a group that says you are committed to us for the next seven to 10 years and you would like out. Good luck.
Marcia Edwards: You’ve got to recognize the trade off. So if it sounds too good to be true, it may be, but it may also not be too good to be true. You got to get counsel from CPA attorney and Bob Nelson regards in to your investment real estate.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30pm on KPNW for the “Real Estate Today” radio show.